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It is highly implausible that all fiats would all be worth nothing simultaneously. If the USD hyperinflated for example you could find that 1 BTC = $100,000 and that is just about enough to buy a video game on steam. If most/all fiats became some hyperinflated as to be worth less than the paper they are on (i.e global Zimbabwae) I would expect most exchanges would be pricing BTC:GLD and BTC:SLV.
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A reasonable way to test how these guidelines work in practice would be to inform FinCEN about suspected illegal activity of the "Linden Lab's currency brokerage" and monitor what happens then.
I am not sure if asking FinCEN about interpretations will bring us further. I have no idea how vague official clarifications are in US, but in Poland You get 4 different (contradictory) official opinions and none of them tells You the answer to your questions. Provoking court decisions was always a slow but more reliable alternative.
You can seek an administrative ruling. Essentially it is a letter which requires FinCEN to provide specific written direction/clarification. While it isn't the "law", if FinCEN gives you an administrative ruling stating "x" it provides some measure of protection if they later change their mind. |
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The company has a debt denominated in BTC. The hedge would be to hold any profits in BTC. Having a debt in BTC and holding assets in USD isn't a hedge, it is a short position. Imagine if hypothetically Bitcoin rose to $500 USD per BTC. Suddenly the company would owe $15M USD worth of debt. I had hoped that bitfloor would seek outside investors make a deal to fix the debt to USD offer something like a 33% haircut, 33% repaid upfront, and 33% repaid over next x years. As it is holding USD and watching the BTC denominated debt skyrocket is just a stone around the neck of bitfloor.
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John we're talking about two different things. "Volume" is the count of trades over a period of time. It should always be a whole number. No it isn't. Think about how utterly worthless that would be as a metric. You trade 1 order of 100,000 BTC = 1 volume? I trade 100,000 orders of 1 satoshi each (0.001 BTC total) = 100,000 volume? What use would that be as a metric? VOLUME on any currency exchange is the amount of currency traded. MtGox measures the BTC volume (i.e. the total BTC traded in the prior 24 hours). |
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Just to clarify, is there anything in this that affects the direct exchange of bitcoins for goods and services?
The guidance specifically states that is NOT a MSB or an activity regulated by FinCEN. |
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The last few characters ARE already a checksum. Well made bitcoin sites don't let you enter an address with a wrong checksum. Which sites display the "correctness" of the entered address before the form is submitted? We do  Anyway, your avatar image is already wrong by $10  We do also. Still implementing a color system would require websites changing (or caring enough to change) so couldn't they just validate addresses? Also there is little danger in a site taking an invalid address. An invalid address (doesn't comply with proper address structure and checksum) can't be accepted by the network. It is potentially confusing to the user but funds can't be lost. The tx even if forced would be ignored by the network as invalid. |
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This is good news. With clear rules the economy can really begin to prosper. The problem is the rules aren't clear. The guidance simply says (simplified) virtual currency exchangers are money transmitters. Well that is all well and good except the guidance doesn't provide any guidance on complying with the BSA. Just registering as a MSB is easy. Anyone (company or individual) can do it in about five minutes by filling out a 4 page form. The problem is compliance. Registering is saying "yes I am in compliance" and if you aren't well that is lose all your money or jail time. The problem is that "compliance" isn't possible if you can figure out how to comply. Just on example of the inconsitencies and vagueness of applying money transmitter rules/requirements to currency exchangers. Money transmitters are required to collect and record information on money transmissions in excess of $3,000. If I buy 100 BTC from you and pay you $5,000 by bank wire. Who is the sender? Who is the receiver? In a classic money transmitter scenario (the one in all FinCEN courses, and documents) the money transmitter is the middle man. Sender -> Money Transmitter -> Receiver. The MT records the information both both entities. Is the MT both the MT AND the sender? Are you the sender and receiver? Are we both MT and one of the roles? Who knows. There are some plausible "guesses" but get it wrong and you could be fined up to $250,000 for each inaccuracy. The "guidance" is nothing of the sort. Paraphrased version of FinCEN "guidance": Um you guys are money transmitters and stuff, so figure out how what we expect you to do without us telling you what we expect you to do and BTW if you get it wrong or we later change our mind and decide you got it wrong well you go to jail. Below is the regulation in question, now figure out what needs to be recorded. (e) Nonbank financial institutions. Each agent, agency, branch, or office located within the United States of a financial institution other than a bank is subject to the requirements of this paragraph (e) with respect to a transmittal of funds in the amount of $3,000 or more:
(1) Recordkeeping requirements. (i) For each transmittal order that it accepts as a transmittor's financial institution, a financial institution shall obtain and retain either the original or a microfilm, other copy, or electronic record of the following information relating to the transmittal order:
(A) The name and address of the transmittor;
(B) The amount of the transmittal order;
(C) The execution date of the transmittal order;
(D) Any payment instructions received from the transmittor with the transmittal order;
(E) The identity of the recipient's financial institution;
(F) As many of the following items as are received with the transmittal order: 1
1 For transmittals of funds effected through the Federal Reserve's Fedwire funds transfer system by a domestic broker or dealers in securities, only one of the items is required to be retained, if received with the transmittal order, until such time as the bank that sends the order to the Federal Reserve Bank completes its conversion to the expanded Fedwire message format.
( 1 ) The name and address of the recipient;
( 2 ) The account number of the recipient; and
( 3 ) Any other specific identifier of the recipient; and
(G) Any form relating to the transmittal of funds that is completed or signed by the person placing the transmittal order.
(ii) For each transmittal order that it accepts as an intermediary financial institution, a financial institution shall retain either the original or a microfilm, other copy, or electronic record of the transmittal order.
(iii) For each transmittal order that it accepts as a recipient's financial institution, a financial institution shall retain either the original or a microfilm, other copy, or electronic record of the transmittal order.
(2) Transmittors other than established customers. In the case of a transmittal order from a transmittor that is not an established customer, in addition to obtaining and retaining the information required in paragraph (e)(1)(i) of this section:
(i) If the transmittal order is made in person, prior to acceptance the transmittor's financial institution shall verify the identity of the person placing the transmittal order. If it accepts the transmittal order, the transmittor's financial institution shall obtain and retain a record of the name and address, the type of identification reviewed, and the number of the identification document ( e.g., driver's license), as well as a record of the person's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, or a notation in the record of the lack thereof. If the transmittor's financial institution has knowledge that the person placing the transmittal order is not the transmittor, the transmittor's financial institution shall obtain and retain a record of the transmittor's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, if known by the person placing the order, or a notation in the record of the lack thereof.
(ii) If the transmittal order accepted by the transmittor's financial institution is not made in person, the transmittor's financial institution shall obtain and retain a record of the name and address of the person placing the transmittal order, as well as the person's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, or a notation in the record of the lack thereof, and a copy or record of the method of payment ( e.g., check or credit card transaction) for the transmittal of funds. If the transmittor's financial institution has knowledge that the person placing the transmittal order is not the transmittor, the transmittor's financial institution shall obtain and retain a record of the transmittor's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, if known by the person placing the order, or a notation in the record of the lack thereof.
(3) Recipients other than established customers. For each transmittal order that it accepts as a recipient's financial institution for a recipient that is not an established customer, in addition to obtaining and retaining the information required in paragraph (e)(1)(iii) of this section:
(i) If the proceeds are delivered in person to the recipient or its representative or agent, the recipient's financial institution shall verify the identity of the person receiving the proceeds and shall obtain and retain a record of the name and address, the type of identification reviewed, and the number of the identification document ( e.g., driver's license), as well as a record of the person's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, or a notation in the record of the lack thereof. If the recipient's financial institution has knowledge that the person receiving the proceeds is not the recipient, the recipient's financial institution shall obtain and retain a record of the recipient's name and address, as well as the recipient's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, if known by the person receiving the proceeds, or a notation in the record of the lack thereof.
(ii) If the proceeds are delivered other than in person, the recipient's financial institution shall retain a copy of the check or other instrument used to effect payment, or the information contained thereon, as well as the name and address of the person to which it was sent.
(4) Retrievability. The information that a transmittor's financial institution must retain under paragraphs (e)(1)(i) and (e)(2) of this section shall be retrievable by the transmittor's financial institution by reference to the name of the transmittor. If the transmittor is an established customer of the transmittor's financial institution and has an account used for transmittals of funds, then the information also shall be retrievable by account number. The information that a recipient's financial institution must retain under paragraphs (e)(1)(iii) and (e)(3) of this section shall be retrievable by the recipient's financial institution by reference to the name of the recipient. If the recipient is an established customer of the recipient's financial institution and has an account used for transmittals of funds, then the information also shall be retrievable by account number. This information need not be retained in any particular manner, so long as the financial institution is able to retrieve the information required by this paragraph, either by accessing transmittal of funds records directly or through reference to some other record maintained by the financial institution.
(5) Verification. Where verification is required under paragraphs (e)(2) and (e)(3) of this section, a financial institution shall verify a person's identity by examination of a document (other than a customer signature card), preferably one that contains the person's name, address, and photograph, that is normally acceptable by financial institutions as a means of identification when cashing checks for persons other than established customers. Verification of the identity of an individual who indicates that he or she is an alien or is not a resident of the United States may be made by passport, alien identification card, or other official document evidencing nationality or residence ( e.g., a foreign driver's license with indication of home address). |
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Drop the word free. The first time someone gets prompted for a mandatory fee because their tx is low priority or over sized that false free promise seems like bogus advertising. Bitcoin isn't free, it has never been free, and it will never be free. Even people who are able to send a tx without a fee pay for the network through the inflationary effect of new block subsidies.
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Fincen called me back. ... He had no idea
Yeah this is the hard part If you get someone knowledgeable on the phone MSB is an umbrella term. A money transmitter (or check casher, or issuer of prepaid access) are all MSB. All Money transmitters are MSB but not all MSB are money transmitters. FinCen has no specific "Money Transmitter" registration. They register MSBs. They register check cashers as MSB, issuers of prepaid access (stored value) as MSBs, and Money Transmitters as MSB. There are seven activities which a company can declare when registering as a MSB. It is possible for a single entity to be registered as an MSB conducting more than one activity (i.e. WU is a money transmitter and also issues money orders). From the source.... (ff) Money services business. A person wherever located doing business , whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(1) through (ff)(7) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.
(1) Dealer in foreign exchange. ...
(2) Check casher ...
(3) Issuer or seller of traveler's checks or money orders. ...
(4) Provider of prepaid access ...
(5) Money transmitter ...
(6) U.S. Postal Service. ...
(7) Seller of prepaid access. ... http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=1308d21216c7d185f6892cfa3276c899&rgn=div5&view=text&node=31:3.1.6.1.2&idno=31#31:3.1.6.1.2.2.3.1 |
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I think the actual creation occurred in 2009 when the Bitcoin Protocol was launched. I would argue that the protocol "creates" the coins, and USA based miners are just claiming them. It's a point that a hostile regulator or judge would not likely accept. However someone would have a legit argument if they wanted the cost and complexity of a court case. A Bitcoin miner can't make any Bitcoin not allowed by the protocol. The protocol has always allowed only 21M coins. On day zero there were 21M coins available (for someone with sufficient hashing power). The protocol decides how and when a Miner will receive a coin (as a subsidy for securing the network). ^ Note the above shouldn't be seen as legal advice. Ultimately on this or any other issue what matters is what the old guy in a robe thinks, still many judges are logical and a logical argument can be made that Bitcoin miners aren't "creating" coins anymore than gold miners are creating gold. They are simply "unlocking" them. |
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Bitcoin, Namecoin, PPCoin, Devcoin, Terracoin, Ixcoin, Freicoin Other than namecoin and Devcoin none of those support merged mining. Technically Bitcoin doesn't support merged mining but as long as the dependent coin supports it Bitcoin hashes can be used even though Bitcoin is "merge mining ignorant". From the Bitcoin network's perspective the Bitcoin blocks are hashed as "normal" it just happens that sometimes those blocks (above or below the difficulty target) can be used to solve other chains. Bitcoin is unaware that the blocks are being used for other purposes. |
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How would it be possible to setup merged mining for all SHA-256 based cryptocurrencies at once?
So that one could mine Bitcoin, Namecoin, PPCoin, Devcoin, Terracoin, Ixcoin, Freicoin simultaneously.
AIUI, you can only merged mine two coins at once, and the codebase has to support it. Incorrect. You can marge mine an infinite number of coins at once as long as the codebase of the dependent coin supports it. People routinely do mine more than two coins at the same time. They don't have much value but it can be done. |
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Well no. Those are regs on a DEALER of precious metals. Someone buying precious metals (other than a dealer) isn't subject to reporting requirements. The reporting requirements are on the dealer. By your logic USD is currency therefore everyone in the US walking into a coin shop to trade $30 USD for 1 oz of silver is a MSB and has been in violation of the law. |
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I am preparing an article about this and I have a call into Fincen for clarification.
If you get someone knowledgeable on the phone clarify that a miner exchanging Bitcoins for "real currency" using a broker/exchange registered as a MSB, doesn't itself need to register as a MSB. i.e. Bob the miner exchanges coins for USD at CoinFort (a registered MSB). Bob is not registered as an MSB is Bob compliant? Lets say Bob is running his mining operation as a business but never sells coins to other individuals but only to CoinFort is he still compliant? |
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So are you an private auditor for private sector or a federal agent? Neither it is like being certified in using Microsoft word. It is a check the box type certification so a cash handling business can say their employees were trained. A couple hours of study (online courses available) and a multiple choice exam. |
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Now this brings up the states your U.S. registered company does business in, now they want a cut to. So every state you have customers you buy or sell to, you will need to be registered in that state as well, just like good ole paypal.
North Carolina Requires 500k capital <---- They got it posted on the Gas station doors that sell green dot and netspend Just because FinCEN and states use the same term "Money Transmitter" doesn't mean they have the same definitions. There is no universal legal definition of anything. One needs to look at the state statute and see if the definition applies. This is best done with legal counsel and not by making broad and unsubstantiated claims on the intertubes. |
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The law only covers those who "create" virtual currency. E.g. Linden Labs for SLL. I don't see how this can cover miners, who are "granted" virtual currency. I think you are drawing conclusions far too soon here.
c. De-Centralized Virtual Currencies
A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.
A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.
See my emphasis. This is while not crystal clear but it is difficult to interpret any other way than as bitcoin miners are money transmitters if they sell for fiat. You can interpret it as you like, but what is important is how judges and regulators will interpret it and you can bet they will not be trying their best to bend over in favor of miners, the opposite is more likely. However, selling for fiat on an exchange is unlikely to make the miner a "money transmitter", because "money transmitting" function is performed in this case by the exchange. What is bizare is that FinCEN failed to address that obvious exception. Seems they would have clearly identified that a person selling virtual currency they "created" to an exchange (registered as a MSB) doesn't need to register as an MSB as well. We (TC, LLC) will be filing for an administrative ruling asking for clarification on a few points and we have included the one above. |
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As TU.SILVER stocks all the silver it sells, it is now the only legal coin shop in the community. False. |
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This guidance addresses "convertible" virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency. Given that Bitcoin has no equivalent value in any "real currency" The applicability hinges on the words "substitute for real currency". It is beyond doubt that virtual "currencies" like Amazon Points or Facebook Credits fall under the guidelines but it is unfortunate that FinCEN didn't provide more guidance on the term "substitute for real currency". Time to draft another request for administrative ruling. |
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I'm going to delete this thread at 21:30 UTC.
No you won't. |
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